IRA vs. 401(k): Why Invest in Gold

It is possible to purchase gold coins and bullion within a self-directed IRA or 401(k) that has been established with a trust company.

IRAs and 401(k)s provide tax advantages for saving for retirement since the growth of your investments is tax-free. Nevertheless, there exist distinct disparities between these plan types.

What’s a 401(k)?

A 401(k) is a retirement plan sponsored by your employer that is considered a qualified plan. These retirement plans fall into the category of “defined contribution,” which means that you and possibly your employer (usually between 3-6%) contribute a set amount of money each month, quarter, or year. However, the amount you will receive in retirement will depend on the account’s market value. If your employer does not offer a 401(k) or any other sponsored plan, it would be wise to start saving in either a Roth IRA or a traditional IRA, as these options allow you to select your investment choices.

What is a Gold 401(k)?

Are you wondering about the concept of a Gold 401(k)? In reality, there is no such thing as a Gold 401(k), but you might be interested in a Gold IRA. A Gold IRA functions similarly to a regular IRA, with the exception that it can also hold physical gold coins and bars instead of solely paper assets. If you have a 401(k) from your current or previous employer, all you have to do is ask for a transfer of funds to a new Gold IRA. This process is tax-free and can usually be completed with a simple phone call to your current custodian. Once the call is made, your custodian should transfer the funds directly into your new Gold IRA.

Who can participate?

If you are employed by a company that provides a plan, you can benefit from your employer matching your 401(k) contributions for up to 6% of your salary. For the years 2015 and 2016, employees were permitted to contribute a maximum of $18,000 of their pre-tax income to a 401(k), and those who are over 50 years old can make an extra catch-up contribution of $6,000. The contribution limits for a 401(k) are approximately three times greater than those for an IRA.

What you can invest in a 401(k)?

Employers often restrict individuals to a predetermined selection of investment options, but there is an opportunity to transfer your 401K funds into a self directed IRA focused on Physical Precious Metals.

What’s an IRA?

While those employed by companies offering 401(k) plans have the opportunity to contribute, anyone can contribute to a traditional IRA (individual retirement account).

Who can participate?

Roth IRAs have no age limit as long as individuals are under the age of 70½. Similar to a 401(k), an IRA provides tax-deferred growth on investments, indicating that assets will not be taxed until withdrawn. Additionally, a traditional IRA might allow tax-deductible contributions for those who do not partake in an employer-sponsored plan. It is advisable for young individuals to contemplate the future advantages of a Roth IRA considering the possibility of substantial tax rate increases in the coming decades, as suggested by numerous experts.

A Roth IRA has different tax advantages compared with a traditional IRA. With a Roth IRA, you pay taxes on your income before making contributions, but withdrawals in retirement are not subject to taxes on earnings. Once you meet certain criteria (being 59 1/2 years old or older and having the plan for five years or more), you can withdraw both your deposits and investment appreciation tax-free. In addition, you can withdraw funds without penalties for education expenses for a child or a down payment on your first home. However, not everyone is eligible for a Roth IRA. To be eligible, your adjusted gross income must be below $116,000 or $183,000 for married couples filing jointly.

What can you invest in an IRA?

You have the option to invest in a diverse range of mutual funds, exchange-traded funds (ETFs), and individual stocks and bonds. Additionally, you can also invest in Physical Precious Metals using a Self Directed IRA.

Why Invest in Gold?

When new clients contact American Bullion, they commonly inquire about the reason for investing in gold as one of their initial questions. This inquiry, although straightforward and sincere, has important implications for your financial future as the benefits of investing in a Gold 401(k)/IRA are significant.

Gold Limits Exposure from Wall Street

Gold is a financial asset that functions independently of credit. Possessing physical ownership of valuable metals reduces overall portfolio risk by diversifying assets from paper-based ones.

Gold Creates Protection for Your Portfolio

Gold has no counter-party or credit risk and is a tangible asset with value. It has served as a store of wealth for thousands of years and has outlasted numerous currencies worldwide. Additionally, it can be stored in IRS-approved depositories in the United States, and it is possible to obtain full insurance for it.

The Dollar Doesn’t Buy What It Used To

Since 2008, the money supply of the Federal Reserve has increased by over 100%, which has resulted in the depreciation of the U.S. dollar and decreased its purchasing power. Conversely, the value of gold has consistently risen by more than 300% since 2000. As a result, it is not unexpected that physical gold has been utilized as a safeguard against inflation and as a secure investment during times of economic uncertainty for many years.

What Types of Gold Can Be Added to a Gold 401(k)/IRA?

If you want to establish or expand a Gold 401(k)/IRA, American Bullion provides a variety of precious metal bars and coins. It is important to note that only specific bars and coins comply with IRS regulations for adding to a Gold IRA. Therefore, when deciding which bullion bars and coins to buy, consult with a gold specialist to determine the products that align with your investment or collecting goals.

The most popular coins and bars available for IRA investment are:

American Gold Eagle Coin
Proof Gold American Eagle Coin
Canadian Gold Maple Leaf Coin
American Gold Buffalo Coin
Austrian Philharmonic Gold Coin
PAMP Suisse Gold Bar

Gold 401(k)/IRA FAQs

How long does it take to complete a rollover?

The completion of most rollovers takes approximately 10-15 business days. The duration relies on the procedures of your current 401(k) custodian in releasing your funds.

How much does a rollover cost me?

While there are no charges for the rollover process, it is common to encounter closeout fees imposed by previous custodians, as well as minimal fees for setting up new Gold IRAs and maintaining them.

What are the rules and limits for a 401(k) rollover to a Gold IRA?

Individuals can only do one rollover per plan, per year. Transfers are unlimited.
Rollovers generally need to be a like-to-like transition. For example, a pre-tax 401(k) will need to be rolled over to a pre-tax (Traditional) IRA, and a post-tax 401(k) will need to be rolled over to a post-tax (Roth) IRA.
To qualify for a rollover, you must meet one of the following requirements: 1) you no longer work for the company that set up the plan, or 2) if currently employed by the company issuing the plan, you are of age 59 ½ or older.